As use of the Internet expands, ever more financial transactions are completed electronically between two remote parties. One growing area of electronic financial transactions is donations, and in particular political donations. As seen in recent political campaigns, significant contributions are made to a particular candidate through the Internet. Donations can also be made to organizations for charitable, humanitarian, religious, or other reasons.
Primarily, donations made through the Internet are through credit cards. If a donor wishes to donate electronically to a particular beneficiary, the donor presents credit card information through the beneficiary's website. The credit card can be one of several kinds, such as credit cards by VISA®, MASTERCARD®, AMERICAN EXPRESS®, DISCOVER®, as well as other lesser cards, or debit cards. Generally, credit card transactions made in person at a retail store require that the credit card be swiped by a credit card reader so that the account number, cardholder name, expiration date, and/or other information can be read from a magnetic strip on the credit card, as discussed in “Accept Online Payments” by the CyberSource Corporation in 2007. Swiping the credit card through a reader quickens the transaction because the information does not have to be manually entered. However, when a donor is donating through the Internet, the donor has to manually enter the credit card information into the organization's web page to complete the transaction. Thus, Internet websites often use a gateway that takes the place of a credit card reader, as described by CyberSource. The gateway requests the appropriate information required to begin the transaction, such as cardholder name, credit card account number, and expiration date. The gateway responds to the credit card holder by indicating whether or not the credit card transaction has been authorized and approved.
After the donor has entered his credit card information along with, at least, the transaction amount, the gateway sends the credit card transaction data to a processing network, as discussed by CyberSource. The processing network translates the electronically submitted credit card transaction data into a form that can be read by the bank that issued the credit card or provided the credit account. Then, the processing network delivers the electronically submitted credit card transaction data to the issuing bank for authorization. The issuing bank authorizes the credit card transaction if the credit card information is valid and if there is sufficient credit or balance available to cover the transaction amount. Once authorized by the issuing hank, the issuing bank causes the processing network to send an approval code hack to the gateway. The gateway then sends an indication that the credit card transaction has been approved to the website, and the website indicates that the transaction has been authorized.
As further described by CyberSource, authorized credit card transactions are typically stored in groups of transactions called “batches” in the gateway. The gateway typically closes out the batches of stored authorized credit card transactions on a daily basis. Generally, at the end of each day, the gateway automatically transmits all authorized credit card transaction data through the processing network so that funds can be transferred from the bank that issued the credit card to the beneficiary's bank account. The issuing bank then transfers funds to the beneficiary's bank account through the processing network to settle the authorized credit card transactions.
The movement of funds from the issuing bank to the beneficiary's account may take several days. Thus, the beneficiary's bank account may not be credited with the transaction amount for several days after the transaction was approved. For instance, VISA® and MASTERCARD® transactions typically take about 1-2 days for funds to be credited to the beneficiary's bank account, while AMERICAN EXPRESS® transactions take about 5-7 days, and DISCOVER® transactions take 3-5 days. Both VISA® and MASTERCARD® use a bank card system in communication with a banking network, whereas AMERICAN EXPRESS® and DISCOVER® use an outside credit card system that is not in direct communication with the banking network. Thus, AMERICAN EXPRESS® and DISCOVER® transactions take longer because they are outside of the banking network used by VISA® and MASTERCARD®.
Also, during the processing of each credit card transaction, transactions fees are collected. Credit card transactions that occur through the Internet can have the credit card transaction fees taken out before or after the transaction amount is credited to the beneficiary's account. Under a net billing agreement, credit card transaction fees are taken out before the amount is credited to the beneficiary's account, while under a gross billing agreement, no transaction fees are taken out before crediting the beneficiary's account. Rather, the transaction fees are collected later from the beneficiary or the beneficiary's account. Typically, net billing agreements are used.
Consequently, several problems arise when trying to correlate the amount submitted by the donor and the actual amount credited to the beneficiary's account. First, the correlation is complicated by the transaction fees. The submitted amount (i.e., the amount paid by the donor before transaction fees are taken out) may not be equal to the credited amount (i.e., the amount ultimately received by the beneficiary after fees are taken out) because transaction fees may have been deducted before the submitted amount was credited to the beneficiary's account under a net billing type agreement. Second, the various delays between when the transaction occurs and when funds are transferred into the beneficiary's account further complicate correlating the submitted amount with the credited amount. As a result of the different time periods for moving funds from different issuing banks to the beneficiary's account, the credited amount will not be received in the same chronological order as the donations.
The problems described above are especially acute for political fundraising where applicable laws require precise reporting and accounting of submitted donations with deposits credited to the political organization's bank account. To address these problems, political candidates have retained teams of accountants who manually track, correlate, and report donations to meet the legal requirements. However, the manual tracking is very labor intensive, inefficient, and slow. The proper accounting of donations can become even more difficult if there are large numbers of donations, transaction fees are deducted before funds are deposited, the deposits are made at varying times after the donation, and the correlations are not made until account statements are received.